ATI lost graphics market share to Nvidia in Q3

Reaction to AMD acquisition?

Investors who argue that AMD should sell off its ATI discrete graphics operation will take heart from market research published today which shows the chip maker's GPU division saw its market share fall in all segments during Q3.

According to Jon Peddie Research, ATI's share of the computer-oriented graphics market dropped from 28 per cent in Q2 to 23 per cent in Q2. Market leader Intel's share remained at 40 per cent, but Nvidia, VIA and SiS all recorded rises, reaching 22 per cent, ten per cent and five per cent, respectively. Nvidia's market share rose two percentage points.

That leaves Nvidia just a single percentage point behind its arch-rival. Indeed, in Q3 it shipped more discrete mobile GPUs than ATI did. The latter's share fell from 63 per cent to 47 per cent between Q2 and Q3, while Nvidia's share rose from 37 per cent to 53 per cent in the same period.

Nvidia also grew its share of the desktop graphics market, to 25 per cent, JPR said. ATI's share slid to 22 per cent. In the discrete segment, ATI quit Q3 well behind its rival - it took 43 per cent of the market, Nvidia 57 per cent.

ATI did beat its rival in the mobile market. Its share fell to 24 per cent, and while Nvidia reached 19 per cent in the quarter, it did so with a big, eight per cent gain. It will be interesting to see whether Nvidia can maintain this momentum during Q4. If so, it would likely push past ATI in this category too.

JPR didn't announce market share figures for the integrated mobile segment, saving these for the Q3 2006 edition of its Market Watch publication.

But the integrated side is less of an issue for AMD, which is surely keener to beef up its chipset offerings than it is to tackle the discrete GPU market. AMD and ATI announced their plan to merge early in Q3, and it's certainly tempting to see ATI's market segment declines as a commentary from customers on the plan. The two firms completed their deal in October this year.

The test will come in the current quarter and the next as GPU buyers decide whether they prefer Nvidia's offerings or prefer to do business with AMD.

JPR reckons some 76m PC graphics products shipped in Q3, 53m of which were desktop parts, the rest going into laptops. Out of that 53m, 59.5 per cent - 31.7m units - were graphics engines integrated into chipsets. In the mobile segment, the integrated complement was even higher: 75.6 per cent of the 23m mobile GPUs that shipped in Q3 were integrated parts. Integrated's share of the mobile segment continues to grow as the low-end and mid-range notebook markets expand.

Graphics product shipments grew 5.2 per cent sequentially in Q3 and 11.2 per cent year on year. Desktop shipments were up just two per cent sequentially and 4.7 per cent over the year-ago quarter, as a big sequential jump - 10.2 per cent - increase in discrete shipments counterbalanced a three per cent decline in shipments of integrated parts. Discrete and integrated shipments were up year on year by 6.8 per cent and 3.3 per cent, respectively.

Mobile shipments rose 13.8 per cent between Q3 and Q2, and 30.2 per cent between Q3 2006 and Q3 2005. Integrated shipments were up 15.8 per cent sequentially while discrete shipments rose just 7.5 per cent - year-on-year discrete shipments were up 9.3 per cent. ®